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Microeconomics principles in business assignment

   

Added on  2021-04-24

20 Pages4064 Words64 Views
Running head: MICROECONOIC PRINCIPLES IN BUSINESS Microeconomic Principles in BusinessName of the StudentName of the UniversityAuthor Note

MICROECONOMIC PRINCIPLES IN BUSINESS 1Table of ContentsIntroduction................................................................................................................................2Economics in Business Decision Making..................................................................................3Scarcity of Resources.............................................................................................................3a) Demand..............................................................................................................................4b) Supply................................................................................................................................9c) Elasticity of Demand........................................................................................................13d) Market Structure..............................................................................................................15Conclusion................................................................................................................................16References................................................................................................................................17

MICROECONOMIC PRINCIPLES IN BUSINESS 2Introduction Economics as a principle discipline has developed substantially over the years, withthe development and dynamics of the global economy. The conceptual framework ofeconomics, as a subject can be divided into two broad categories- the categories beingmicroeconomics and macroeconomics. While macroeconomics specifically focusses onissues or phenomena which have effects on the economy of a region or a country as a whole,microeconomics is that genre of the subject which deals with the economic behaviour orphenomena related to one individual household or business entity (Baumol and Blinder2015). Thus, in simpler words, macroeconomics is the study of a larger domain of economyand economic issues while microeconomics aims to explore the dynamics in the economicbehaviour of the individual economic agents, both in the household as well as in the businesssectors of an economy. Keeping this into consideration, it can thus be asserted that economics as a subjectplays a key role in the economic decision makings as well as operational frameworks of thecommercial institutions across the world. Over the years, with the increase in the dynamics ofthe global commercial scenario and with international phenomena like Globalisation andLiberalisation in most of the economies of the world, increasing numbers of businesses aregoing global (Gurgul and Lach 2014). The business operations are also becomingincreasingly integrated, multilateral and complex, owing to the increasing inclusions ofevents and operations in the business frameworks. The competitiveness among the businessorganizations are also increasing owing to the increase in the supply side players and changesin the taste and preferences of the demand side players (Nicholson and Snyder 2014). In this context, it becomes immensely crucial for the commercial enterprises toemphasize on their decision making process and operational aspects such that their objectives

MICROECONOMIC PRINCIPLES IN BUSINESS 3of profit maximization and staying ahead of the competitors, thereby attaining sustainabilityin the long run are achieved. Taking this into account, the report tries to analyse and discussabout the different microeconomic principles and factors which have implications on themanagement of commercial organizations in the contemporary global economic scenario. Economics in Business Decision Making Scarcity of Resources One of the primary problems which the businesses face in all parts of the world is thescarcity of resources which are required for the production of their goods and services. Theproblem of scarcity of resources is considered the most vital concern in the domain ofmicroeconomics and also one of the primary assumptions in the subject (Krautkraemer 2012).The resources required for production are mainly of four types, which are as follows: Land resources- The land resources, in economics, not only consider land but also isinclusive of all the natural resources used for the production of goods and services, whichinclude resources like water, natural gas, minerals, natural energy resources like oil, coal,forest resources and other raw materials, which are broadly required for the production of anycommodity or service. These land resources are scarce and the producers using theseresources pay prices in the form of rent (Frank and Cartwright 2013). Labour resource- This is considered to be the most vital resource used in the productiveactivities of any organization. Labour, in terms of economics, is the effort which people givein the production of goods and services of any organization. The price or income earned bythe labour resources are known as wages (Sapsford 2013). Capital resources- In general, the non-human, manmade resources which are used forproduction of goods and services are categorised under the domain of capital resources ineconomics. These resources include the machineries, plants, tools as well as the financial

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